Fiscal policy refers to changes in

A. federal taxes and purchases that are intended to achieve macroeconomic policy objectives.

B. state and local taxes and purchases that are intended to achieve macroeconomic policy objectives.

C. the money supply and interest rates that are intended to achieve macroeconomic policy objectives.

D. federal taxes and purchases that are intended to fund the war on terrorism.

29) If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy?

A. a decrease in government purchases

B. an increase in the money supply and a decrease in interest rates

C. a decrease in oil prices

D. a decrease in taxes

30) Which of the following is an objective of fiscal policy?

A. health care coverage for all Americans

B. energy independence from Middle East oil

C. high rates of economic growth

D. discovering a cure for AIDs

31) Which of the following assets is most liquid?

A. bond

B. money

C. stock

D. savings account

If credit card balances rise in the economy, then M1 will ________ and M2 will ________.

A. not change; not change

B. increase; increase

C. increase; decrease

D. not change; increase

E. decrease; increase

Economists estimate that ________ of U.S. currency is outside the United States and held primarily by ________.

A. less than one quarter; foreign banks and foreign governments

B. over half; households and firms in countries where there is little confidence in the local currency

C. less than one quarter; households and firms in countries where there is little confidence in the local currency

D. over half; foreign banks and foreign governments

The M2 measure of the money supply equals

A. M1 plus savings account balances plus small-denomination time deposits plus noninstitutional money market fund shares.

B. savings account balances plus small-denomination time deposits plus traveler's checks.

C. M1 plus savings account balances plus small-denomination time deposits.

D. savings account balances plus small-denomination time deposits plus noninstitutional money market fund shares.

The M1 measure of the money supply equals

A. currency plus checking account balances plus traveler's checks plus savings account balances.

B. paper money plus coins in circulation.

C. currency plus checking account balances plus traveler's checks.

D. currency plus checking account balances.

36) Which of the following is one of the most important benefits of money in an economy?

A. Money encourages people to produce all of their own goods (self-sufficiency) and therefore increases economic stability.

B. Money allows for the exchange of goods and services.

C. Money makes exchange easier, leading to more specialization and higher productivity.

D. Money allows for the accumulation of wealth.

Open market operations refer to the purchase or sale of ________ to control the money supply.

A. U.S. Treasury securities by the U.S. Treasury

B. corporate bonds and stocks by the U.S. Treasury

C. U.S. Treasury securities by the Federal Reserve

D. corporate bonds and stocks by the Federal Reserve

38) Which of the following determines the amount of money the banking system as a whole can create?

A. the quantity of bank reserves

B. the quantity of vault cash held by banks

C. the gold reserves held by the Federal Reserve

D. the limit on profits by banks imposed by the U.S. Congress

Date: 2015-12-24; view: 1362